But for India to be heard on the global stage,it must pull itself out of the rut at home
India seems to have learnt the fine art of give-and-take at the global high table. On Monday,Prime Minister Manmohan Singh announced that India would bolster the International Monetary Funds additional $430 billion firewall for the eurozone by chipping in with $10 billion. Together,the BRICS as a block is contributing $60 billion to avert a disaster in Europe. It will be naive to think that India is being largehearted in committing over Rs 55,000 crore to the developed world at a time when it is being pilloried by rating agencies for a high fiscal deficit and inflation at home. Emerging economies,including India,know pretty well that their fortunes are intertwined with the growth prospects of the rest of the world. If the eurozone crisis precipitates,it will hurt them the most.
Manmohan Singhs assessment of the crisis as well as the prescriptions for it have always been patiently heard by the Group of 20. The G-20 makes up almost four-fifths of the world GDP,but over the last couple of summits,it has digressed from the central issue of reviving the global economy. This is one big reason why many seriously doubt the potency of the firewall. Not just that,the G-20,particularly the larger European countries such as Germany and France,has taken too long to sort out its own differences on crucial aspects of the austerity versus growth debate. Clearly,the bitter austerity pill may not be the right medicine for countries across the eurozone. Returning to a sustainable debt position is indeed critical for many European countries,but severely curtailing spends will only serve to hurtle these economies into a downward spiral.
For the PM to get a genuine hearing on the global centrestage in this fraught moment,however,India must get out of the rut that it finds itself in today. While it cannot insulate itself from the rest of the world,it can certainly try and not make it worse for investors by putting all domestic reforms in deep freeze. The government and the financial sector regulators are definitely not on the same page. The RBI governor and the SEBI chairman have said that reforms have been held back for years. The budget promises made by the finance minister have remained on paper. It is time the prime minister took centrestage to initiate reforms at home.